Correlation Between American Hotel and Doman Building
Can any of the company-specific risk be diversified away by investing in both American Hotel and Doman Building at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining American Hotel and Doman Building into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Hotel Income and Doman Building Materials, you can compare the effects of market volatilities on American Hotel and Doman Building and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in American Hotel with a short position of Doman Building. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Hotel and Doman Building.
Diversification Opportunities for American Hotel and Doman Building
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between American and Doman is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding American Hotel Income and Doman Building Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Doman Building Materials and American Hotel is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on American Hotel Income are associated (or correlated) with Doman Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Doman Building Materials has no effect on the direction of American Hotel i.e., American Hotel and Doman Building go up and down completely randomly.
Pair Corralation between American Hotel and Doman Building
Assuming the 90 days trading horizon American Hotel Income is expected to under-perform the Doman Building. In addition to that, American Hotel is 1.52 times more volatile than Doman Building Materials. It trades about -0.35 of its total potential returns per unit of risk. Doman Building Materials is currently generating about 0.43 per unit of volatility. If you would invest 828.00 in Doman Building Materials on August 31, 2024 and sell it today you would earn a total of 137.00 from holding Doman Building Materials or generate 16.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Hotel Income vs. Doman Building Materials
Performance |
| Timeline |
| American Hotel Income |
| Doman Building Materials |
American Hotel and Doman Building Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Hotel and Doman Building
The main advantage of trading using opposite American Hotel and Doman Building positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Hotel position performs unexpectedly, Doman Building can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Doman Building will offset losses from the drop in Doman Building's long position.| American Hotel vs. Sprott Physical Gold | American Hotel vs. Canso Select Opportunities | American Hotel vs. Green Panda Capital | American Hotel vs. Manulife Finl Srs |
| Doman Building vs. Baylin Technologies | Doman Building vs. Supremex | Doman Building vs. iShares Canadian HYBrid | Doman Building vs. Brompton European Dividend |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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